SAO PAULO (Reuters) - Brazilian restaurant franchise operator IMC said on Wednesday it has signed a binding agreement to create a joint venture with Kentucky Foods Chile Limitada regarding IMC's operations of KFC restaurants in Brazil.

According to the deal, IMC will sell a 58.3% stake of its KFC operations in Brazil to the Chilean group for $35 million, IMC said in a securities filing.

IMC said it will use the proceeds from the deal to reduce its debt, adding the agreement will allow further expansion of the KFC brand in the country without direct investments from the company.

There are some 230 KFC restaurants in Brazil, said IMC, which also operates Pizza Hut, among other brands, in the Latin American country.

According to IMC, the deal grants the joint venture exclusive rights to operate the KFC brand in Brazil. Despite owning all KFC outlets in Brazil, IMC did not previously possess nationwide exclusive rights to the brand.

The deal values IMC's KFC operations in Brazil at $60 million, which is more than IMC full market-value of near $55 million.